Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News
Sponsored By
Supermarkets Less Vulnerable to Disintermediation
BURLINGAME, Calif. A lot of today's major retailers will have to adapt to changing technologies and changing consumer demand over the next eight years, but supermarket operators may not have to make as many adjustments, a market research executive said here. While a lot of general-market suppliers may decide to retail to consumers directly to regain some of the power they have lost to retailers over
Elliot Zwiebach
May 7, 2007
4 Min Read
ELLIOT ZWIEBACH
BURLINGAME, Calif. — A lot of today's major retailers will have to adapt to changing technologies and changing consumer demand over the next eight years, but supermarket operators may not have to make as many adjustments, a market research executive said here.
While a lot of general-market suppliers may decide to retail to consumers directly to regain some of the power they have lost to retailers over the years, “it's less likely companies in the grocery industry will be disintermediated, because they have done such a good job aggregating products critical to the shopping experience and to efficiency,” Elaine Pollack, executive vice president, TNS Retail Forward, Columbus, Ohio, said during a presentation at “Retail 2015: New Frontiers,” a daylong seminar here sponsored by her company.
But for suppliers in other industries, including fashion and home electronics, “the two credos they will follow between now and 2015 will be ‘The best defense is a good offense,’ and ‘If you can't beat them, join them,’” Pollack stated.
“For consumers to see full lines of the suppliers' products, instead of just what fits on a retailer's shelf, suppliers must find ways to deal directly with consumers, do more collaboration with retailers or simply open their own stores,” she said.
FORCES IN PLACE
Most of the forces that will drive retail by 2015 are already in place, Pollack pointed out.
“The next eight years will be a time of transition, with one long-time cycle coming to a close and new market forces becoming more prevalent,” she said. “With Baby Boomers reaching age 70-plus by 2015, the retail concepts they demanded will reach the end of the runway, with the idea that bigger is better breaking down and ‘small’ becoming the preferred approach for business.
“Doing business in 2015 will be about managing complexity and diversity; thinking big but able to act small, and about global companies that can reach out to a niche of just one.”
Among Pollack's other predictions:
More people will look for smaller, more personalized spaces to live in and to shop, which will lead to more niche marketing “and micro-merchandising down to a unit of one,” she said.
Retailers will sell less of more, Pollack said, breaking the 80/20 rule that says 20% of merchandise represents 80% of sales. Instead, by 2015, the other 80% of merchandise will represent a growing percentage of sales and a disproportionate percentage of profits, Pollack noted.
“With expanded access, consumers will buy less of what's ‘popular’ and more of what suits them, and the mantra of profitable retailers will be ‘Now you see it, now you don't’ instead of ‘Stack it high and let it fly,’” she explained.
By 2015 consumers will see the demise of cookie-cutter specialty chains with 1,000 locations that offer the same homogeneous, narrow and deep assortment everywhere, in favor of chains that top out with a lower store count and an operating philosophy of going back to their roots to get closer to the customers.
Retailers will define themselves by the customers they serve rather than the products they sell, and they will move more into the realm of services, Pollack pointed out.
The definition of “store” will change to encompass businesses with no inventory, “endless aisle” kiosks offering extended product lines, drive-throughs, touchscreen windows that take orders and store-within-a-store sections within host facilities.
The line between maker and consumer will blur as consumers gain unprecedented levels of connectivity enabling them to get involved in the development and customization of their own products, media streams and shopping experiences.
Penetration of private brands and manufacturer exclusives across virtually all categories will explode “as retailers require differentiation, versatility, newness and return on inventory investment,” Pollack said.
Power will shift from retailers to the people as consumers gain “almost perfect information access” about products and pricing, making it almost impossible for retailers and producers to maintain a significant difference in margins on widely distributed items. “Expect consumers to want almost perfect product access — what they want, when they want it, in the size they want it, at the price they want to pay for it, at the place they want to shop for it,” Pollack explained.
In the technological environment of 2015, consumers will be able to shop location-free via wireless devices, networked appliances, automatic replenishment and device-to-device communication.
About the Author
You May Also Like
